Home Appraisal Question(s)

We have bought a house that was appraised for less. We agreed on a price of 168,000 and the appraisal came in at 165 000. Luckily, the sellers were nice enough to reduce the price to meet the appraised value, otherwise the 3K would have been added to the necessary downpayment, which at that point in our life would have been a problem. However, we liked the house so much that we would have paid it anyway. But unless there is something very special about your house, I don't think you can expect to get more than the appraised value. We were willing to pay more because that house backed onto the park, which in my opinion was worth the 3K.

When we sold that same house we had a relocation company help us because my husband had to move for his job. Before they put the house on the market they got 2 appraisals. One came in at 135 000 (only about 8 months after we paid 165K for it) and the other came in at 162 000. Because they were so far apart we were allowed to get a third appraisal. The third one came in at 175K. What I've learned from all that is that there can be a huge difference between different appraisers. Also, pointing out all the upgrades you did to the appraiser and having the house in good shape and clean probably helps. The third appraisal that came in at 175K I really tried to sell it to the appraiser so that it would come in as high as possible and apparently it had worked quite well.

I would talk to the realtor or the closing company about the difference, but as you said, you'll probably have to bring a check to the closing.

Most banks won't approve a loan for more than the appraised value. During the housing boom, we sold our condo for $141,000 and it appraised at $137,000. The client wanted it badly so he gave us the asking price. Bank would only finance 137K, client gave us the rest in cash. I seriously doubt this happens now. Too much inventory out there. You would most likely have to make up the difference yourself trying to get out of the house.

It's not uncommon for a house to appraise for less than what is owed or less than what is being asked for. But the housing market dictates what it sells for or finances for. ALL the numbers will be hashed out before you ever walk into the closing. There won't be any surprises. Most mortgage companies loan 110% or up to 125% of value, that is where the extra money comes into the picture.
Don't worry about it, everything will work out.

I think when you sell like that it's called a short sale. For a long while after the housing melt down, banks weren't willing to finance short sales - so even if you could find a buyer, they couldn't get financing.

Most realtors are willing to answers questions like that for you. Some have FAQs like that on their websites.

It is such a bad time to be considering selling a home. My real-estate friends are all talking about how if someone wanted to make a huge profit they should start buying all the houses they can get right now because they are selling for pennies on the dollar. Many homes are being sold for less than the purchase price and much less than their value even a year ago, much less their value 5 years ago. If you can wait it out then you need to hold on and wait to sell until our economy picks up, if it ever does.

If you must sell then be prepared to sell for a loss.